ACQUISITION OF AGRICULTURAL LAND WEATHER TAXABLE OR NOT -LATEST JUDGEMENT FROM HIGH COURT Capital asset-Agricultural land situated beyond 8 kms from municipal limits and beyond 19 kms from centre of city-Not a capital asset–Land shown in revenue records as agricultural compensation is not assessable as capital gains. (S.45 ) The assessee’s lands were acquired by Reliance Projects Engineering Association Ltd through the Government of Gujarat and the assessee received compensation. He claimed the same as the agricultural income considering its agricultural nature. The Assessing Officer rejected the claim holding, that the assessee failed to provide proof that the land was agricultural and did not substantiate that the land was outside the purview of the definition of "capital asset" under section 2(14) of the Act, and treated the income as long-term capital gains. The Commissioner (Appeals) held that the land was located in a village which was 19.34 kms away from the main city. Further, the Commissioner (Appeals) opined that the Assessing Officer invoked the powers conferred by the Act and have obtained the Government records from the Land Revenue Department for ascertaining whether the land fell within the boundaries of 8 kms from the municipal limits or not. Accordingly, the Commissioner (Appeals) held that the land was located outside the village, which was located at a distance of more than 19 kms away from city and granted relief to the assessee. On appeal by the Department: Held, dismissing the appeal, that the land was located beyond 8 kms of the Municipal limits of the Jamnagar and was also located beyond 19 kms from the centre of the city of Jamnagar. On this issue, the definition of capital asset provided in section 2(14)(iii) was not met. There was no notification issued by the Central Government regarding the same being a capital asset. Therefore, the land held by the assessee was agricultural land. It was borne out from the records of the Revenue Department that the lands were described by the District Collector, Jamnagar, as agricultural lands. There was no material in the possession of the Assessing Officer to hold that the land was a capital asset within the meaning of section 2(14) of the Act. The decision of the Commissioner (Appeals) did not call for any interference (A. Y. 2007-2008).
Posted on: Sat, 31 Aug 2013 10:54:31 +0000